Maternity's flaw is not midwives or quality, but economics

Maternity care is much in the news.  Many of MM's readers would have followed the BBC Panorama report on London's maternity care.  The programme concludes that 17 deaths could have been "avoided" in London in 2009.   Yet, this is not new.  There have been stories about the difficulties faced in and by maternity departments for a long time.  The question is why so much attention and is it deserved?  Is there something underlying that is at work and needs fixing, or can it not be avoided?

It could be because of a number of unavoidable reasons.  It could be related to the primordial nature of maternity.  It is when a new life emerges into the world; where our urge to procreate bears fruit.  The attention could be a result of the scale of loss when obstetrics goes wrong.  After all, nobody is “ill.”  And both mother and baby are relatively young.  If these were the reasons why maternity gets so much attention, then there is not much you can do to avoid it.

But MM thinks there is an avoidable problem that underlies these issues.  It is not easily seen, but lies there and manifests itself in poor staffing ratios; lack of doctors on the ward; high rates of vacancy and agency; poor infrastructure and so on.  All of these issues then give rise to problems and incidents.  This fundamental problem is economics; money; lucre - whatever you term it.  Maternity care does not pay for itself in the NHS. 

That may be a bald statement to make, but can be backed up by a detailed review of the economics of maternity.  Militant Manager has built an economic model of a maternity department to illustrate this economic problem (available on request).  At 4,000 births, the model concludes a Trustwill lose c. £2.8m pa, and £3.7m at 6,000 births.

The model was built using publicly available staffing and productivity guidelines.  Many of these are from the Royal College of Midwives (RCM) and the Royal College of Obstetricians and Gynaecologists (RCOG).

Some of you may be thinking that the sums do not work because MM has taken the guidelines from those with a vested interest.  The Royal Colleges are hardly going to suggest meagre staffing.

MM would, however, disagree that this is a fundamental problem – partly because some of the numbers makes broad sense; and partly because the producers also have interests which moderate the financial call.  For example, the RCOG guidelines suggest that units with 4,000 births should have a consultant on the labour ward for at least 40 hours per week and those with 6,000 should have one for 60 hours.  This is ludicrous.  Firstly, it shows an attempt at reflecting the economics, and moderating the call for the number of consultants by paying attention to activity.  If such an attempt was made, then they should have gone the whole and way, and modelled it out.  They would then have realised the parlous state of maternity finances. 

Secondly, and more importantly, each birth is a birth. Should the RCOG not focus on the care given to each birth, and treat it equally?  Why should some babies have a better chance of obstetrician cover?  It is a bit like when a job applicant answers the question “why should we hire you?” with an answer that talks about what they can get out of the job, and how they will enjoy it.  To be frank, that is not very relevant to the company doing the hiring.  The question is how will the company benefit - and in this case, the baby.

Lastly, and most importantly, how can a clinical (not managerial, efficiency or productivity) standard be any different from either zero or 168 hours cover a week?  Births do not follow time patterns, so if a clinically safe birth can happen without an obstetrician on the labour ward, then it is safe that all births happen that way.  Conversely, if a clinically safe birth cannot happen without an obstetrician on the ward, then no births should happen without that.  There is no space for a fudge. 

MM believes that the issue is that people like the RCOG try and solve the fundamental problem of economics in other ways.   The economics does not support great consultant cover; but rather than recognise this fundamental fact, these bodies try and nudge up standards a little at a time, and put the pressure on Trusts to solve it.  Other attempts act in a similar way: for example, the CQC’s publication "Towards Better Births" which aimed to show the distribution of maternity provision, and nudge up standards.  And another is the BBC's Panorama survey.

Fundamentally, however, the issue is that the economics do not add up.  No private provider is working hard to become an elective or AQP provider of maternity care - they are for orthopaedics and other areas.  No Foundation Trust is building spanking new maternity wings - they are building Cancer Centres.  Lots of Trusts are rationing care, and closing their list to non-local geographies.  The numbers do not work.

When the economics do not add up, Trusts do not invest in staff and resources to give good care.  As all good economists know, economics drives our behaviour - even when we do not realise it.  Trusts do not mean to do it; but they do it subconsciously.  The end result is that care suffers, and we get headlines.

The best solution would be to drive up tariffs. 

Why NHS Direct is sitting on one nail

Militant Manager is always puzzled by some things in the National Health Service.  Why do GPs vote for less private sector involvement when they are private contractors themselves?  Why do NHS Trusts work so hard to abide by the EU Working Time Directive, yet allow their consultants to moonlight in the private sector without any restriction on working hours?  Why are there so many bodies who bring out (at times conflicting, and contradictory) guidelines, and rules?  Why would a Secretary of State believe that the optimal method of arriving at the best size of commissioning bodies is by imposing arbitrary management cost allowances?  How can those organisations that rely on concentrated, block contracts ever be judged suitably independent to satisfy the requirements of Foundation Trust status?

It is this last question that I wish to address today.  And it brought into stark relief by NHS Direct which has announced its intention to seek FT status.

Militant Manager knows buy-out and venture capital types (some of them have washed up in Monitor).  Buy-out and venture capital types are good for three things: one is running a good LBO model on Excel (which is not very useful in any other walk of life); two is sitting on boards looking empathetic, but continuously wondering how they are going to explain this to their limited partners and colleagues; and the third is to glean a vague sense of what factors could bring a company down suddenly.

And it is this last thing that is useful in this instance.  One of the things that gets them more excited than a good LBO model, and a board meeting going off plan, is a business with a concentrated customer base.  They know that this will make independence and sustainability difficult.  And given these private equity types have only three useful things to say to the world, we should pay attention to at least one of them.

A business that depends on a very concentrated customer base - and in NHS Direct's case, almost entirely on one customer - is not a business (let alone a self-sustaining one).  It is a hobby like a vintage motorbicycle - entertaining for the owner/ client, but first to be jettisoned in harder times.  Or it is a project - like measuring lichen on Derbyshire hills to understand whether they grow in the sun or shade; whether they grow near roads or near forests.  At the very best, it is an outsourced contract from that key client.  It is most certainly not a client.

The sharper amongst you will be wondering why this does not apply to other project companies like Serco or Capita.  But there is a difference.  Serco and Capita have a large number of contracts; which are not co-terminous and are spread across sectors, clients and geographies.  It is a bit like nails.  If you sit on one nail, it is quite painful and lethal.  But if you sit on a thousand nails, then it is uncomfortable, but not lethal.  Nick Chapman is sitting on one nail.  Tom Riall is sitting on a 1,000.  Whose arse would you rather be?

The even more sharper amongst you will now be wondering why this argument does not apply to Mental Health Trusts, and/ or Community Trusts.  And MM would argue that it does.  But it is a question of degree and judgement.  The four axes to judge on are:

1. The concentration of payors, and their correlation with each other.  NHS Direct has one customer now, but even when 111 is implemented and it gets 10 customers, the customers will be looking to it for the same niche. A niche borne of national initiative.  So if one cancels a contract, it is likely to be because of a change in policy which is replicated elsewhere - so the customers decisions in this regard are very correlated.
2. The avoidability of the fundamental need.  Schizophrenia is not going to go away.  But the need for 111 may well do so.  So Mental Health Trusts are more sustainable than NHS Direct.
3. The distribution of decision making.  Mental Health Trusts get referrals from 100-200 GPs from each PCT - which evidences distributed decision making.  And the PCT commissioning decision is borne of a long history with a number of related parties involved, including social services, police and PCTs.  NHS Direct gets commissioned by some pointy-headed person in the East of England.
4. The independence of price.  In acute care, PbR and tariff are not set by customer and provider.  They are set independently of both, and are a "datum".  This enhances independence.

So when judging the sustainability of organisations, one has to look at these four axes.  So what do I conclude from this:

• NHS Direct is at the extreme of suitability for FT status, and is basically not suitable. Hopefully somebody will listen to me this time.  Not like last time, when nobody listened to me when I said that Europe was not a sustainable single currency area.
• Many Mental Health Trusts and Community Trusts also fail this fundamental test.   Forget about Ambulance Trusts.
• Monitor should start to realise this.  At the moment, Monitor just judges whether the organisation is well controlled and managed at the time of authorisation - but it is possible to manage a hobby or a project well.  The question is whether it is sustainable, and Monitor's assessment (like investment bank risk models in 2007) does not really take into account the full range of eventualities.
• With the concentration of commissioning, acute Trusts are also becoming less sustainable.

The truth, however, is that it is hard for all parties to consider this reality.  They would rather whistle while they sit on a nail.

Why the unions should stop moaning about pensions

Public sector pensions are very much in the news.  The government is seeking to revise future entitlements on the basis of John Hutton's report.  Some unions are mobilising against these reforms.   Others continue to negotiate.

Militant Manager is very interested in the arguments put forward by the unions.  The views can be easily gleaned.  For example,  Mark Serwotka, General Secretary of the Public and Commercial Services Union, has commented in the Guardian.  And Jon Restell, Chief Executive of Managers in Partnership, a start-up union set up by Unison and the FDA (formerly the First Division Association - representing the senior civil service), has commented in the HSJ.

The arguments seem confused.  I am not talking about John Restell's "six reasons" managers should look at hard reality - which are in fact just one reason: "these reforms are a reduction in entitlements."

I am talking about the central issues that they put forward: pensions are affordable, and public sector pensioners are not fat-cats.  The first argument is arguable - and I have not seen a definitive analysis on this.  The second is a fallacy.

Affordability

First, the question of affordability.  Both Mark Serwotka and Jonn Restell make much of the Hutton Report's (the one on public sector pensions - not the white wash on WMD in Iraq) analysis of the projected benefits to be paid as a percentage of GDP.  This chart reproduced from pg 23 of Lord Hutton's report is so central to this point that I reproduce it below, and can be retrieved here.

I am not yet sure what to draw from this chart.  The key idea conclusion that the unions have drawn is that public sector pensions will absorb a smaller proportion of GDP, and is therefore affordable.  I must admit that the government has handled this argument badly.  For me, however, the issue of affordability is not so clear cut.

I need more information than just this to draw any conclusions.  First, I want to know what proportion of the population these pensions are supporting.  If they are supporting a rapidly reducing share of the population, yet the proportion of GDP is not falling as fast, I may still draw the conclusion that it is unaffordable.  

On this question, the data is indicative that the number of people supported by public pensions is falling. I could only find data going to 1992 (on the inpenetrable ONS website) for data on the proportion of the workforce employed in the public sector (this is a useful indicator as given 40 year working lives, this would predict the proportion of new public sector pensioners in 20 years time). Their feature on Public Sector Employment, 2006 shows that in 1992, 23.1% of the employment was in the public sector.  Whereas, the same report says that the figure in 2006 was 20.2%.  So public sector workforce proportion has fallen from 23.1% to 20.2%, a drop of c. 15%.

This drop of 15% in public sector employment proportion does not seem to be replicated in a commensurate drop in the load on GDP identified above.  You only get that sort of drop if you link the 1992 workforce figure with the high load on GDP seen in the 2010-2020 decade above.  This may be legitimate if the 1992 workforce figure was also a peak; but if it was not, then you are not comparing apples with apples. In short, I am not convinced on this, and would need somebody from a statistics programme like More or Less to have a look. 

I also want to look at other data.  For example, what proportion of pensions as a whole (including private and state pensions) are public pensions forecast to take up into the future?  And what proportion of government expenditure is it due to absorb.  These would also point to the affordability - indicating what proportion of the country's desire to spend on pensions or public expenditure, public pensions absorbs.

Fat cats

The second argument marshalled by the unions is just plain incomplete at best, and wrong at worst.  Both leaders make much of the fact that the average public sector pension is very low: Mark Serwotka quotes that average pension "is just £4,200 a year"; Jon Restell states “the ‘gold-plated’ pensions of the public sector are a myth (median women’s NHS pension is about £3,500 a year).”

You do not have to be a genius to see the careful wording, and selectivity, in those quotes.  There is no mention of the years contributed for that sort of pension.  We need those facts to put it in context.  If that is 40 years, then public pensions are indeed not gold plated.  But if the years of contribution are 2, then we are at the other extreme.

The other issue is that we are not talking about the individual here.  We are talking about the average pension.  So if the individual has changed jobs and gone onto another public pension scheme, or indeed a private pension scheme then they may be getting more than one pension.

But the main issue is that the argument is plain wrong in composition.  The government has already stated that those on the lowest pay will not get affected.  If we are meant to draw the inference that reducing entitlements, will affect these small pensioners – that is the very guarantee that the government has already given will not happen.  To hark on is to show that you are not listening.

How to really look at it

So how should we really look at this?  My view is that we should look at it in the context of occupational pension schemes – which is what public sector pensions are.  In this context, there are two key issues: first, what has been happening to occupational schemes as a whole; and secondly, what has been happening to the employer’s own finances.

In terms of occupational schemes, there has been a secular trend in reducing pension entitlements, and shifting towards defined contribution schemes.  This can be seen from the IFS’ Green Budget 2011 report.  A chart from that report is reproduced below, which shows private defined benefit schemes dropping dramatically.  In this context, public schemes are bucking the trend.  

So there is no surprise in public sector pensions feeling the pinch.  All occupational schemes have.

The second part is that a generosity of an occupational scheme is related to the success of the employer, and the employer's own finances.  If we have not seen it already, the government's finances are in a mess: we were running a structural deficit even before the fracture in the markets since 2008.  So, employees of the public sector should expect a smaller pension, rather than jump up and down.

NHS Medical Director seems to have stopped taking his prescription drugs

At least, that is the best reason I can find for the stream of inane and ridiculous comments that Sir Bruce Keogh made at the launch of the Government's campaign to publish data.  As reported in the Telegraph, here are some of his comments [with Militant Manager's commentary in square brackets]:

1. He could envisage an NHS that was "available 24-7". [Isn't the NHS already 24-7, with NHS Direct and A&E?  Maybe he was talking about the date 24/7, coming as it does at the beginning of the school holidays.  Those days are always quite hard to staff.]
2. High-speed broadband could allow people to consult international experts or to take advantage of out-of-hours care provided by overseas doctors in another time zone. [Rather than copper wires allowing foreign doctors to provide out-of-hours GP services from another town zone.]
3. Such technology would lessen the need for a "geographical connection" between GPs and their patients, while it would also enable doctors to conduct what he called "virtual ward rounds". [He is much mistaken.  It is the advent of reviews, listening exercises, quangos, and other pass-times that have allowed GPs such as Steve Field, Charles Alessi, Clare Gerada etc to lessen their geographical connection with their patients; and I know of lots of consultants who already do virtual ward rounds - or is it ghost ward rounds?]
4. He said the NHS had to adapt because “young people won’t put up with having to travel to a doctor and wait 20 minutes when they can just use the web to talk directly to a doctor”. [What!  20 minute wait?????? From the same processes that calls all morning day surgeries in first thing in the morning - so that some wait 3 hours!  Aaagh, if only a 20 minute wait was the norm].
5. Sir Bruce acknowledged that the NHS had yet to lay out a “national vision” for digital access, but he said that it would happen in the future. [Just what we need.  Another grand IT vision.  OOOhhhh, let me volunteer for that one]

The similarities between car design and NHS structures

Car companies have a sophisticated strategy for their cars over time.  Their initial authority is over a particular segment.  But over time, they want to play in different segments.  And they do this by slowly invading that space with a model that consumers are familiar with, and taking their authority and consumers with them.  At the same time, they introduce a different model to fill a space customers already trust the marque with.

This can be seen clearly with Volkswagen's hatchback strategy.  So today's Volkswagen Golf (which is in its 6th iteration, i.e. Mk6) is 50% larger than the original Golf Mk1 introduced in 1975.  It is in effect an offering for an entirely different customer segment.

But on average cars do not get bigger.  And that is because as one model migrates away from its entry configuration, the marque introduces a new model to fill the space it leaves behind.  In Volkswagen's case, as its first family hatchback (the Golf) grew in size, it first introduced the Polo and, as that also grew in parallel with the Golf, it introduced the Lupo/ Fox.

The size changes of Volkswagen's hatchbacks since 1975 can be seen in the chart below.  Size in this instance is calculated as the floor area of the car (length x width) in square metres.

Plus ca change, plus c'est la meme chose.  Even though each model gets bigger, the overall market still looks similar.  So you can see that Volkswagen had an offering in the size range of 5.5 to 6.0 sqm from 1975 to today.  And ever since the early 1980s, it has had a model in the size range of 6.0 to 7.0 sqm.  So though things look like they are changing, they are not.  My child has illustrated this paradox with a drawing of her own.  It is meant to show that each column and each row has a car of each size (small, medium and large) even though it all looks different (at least that is what it is meant to show; please cut her some slack, she is only in the 4-6 bracket).

What does this have to do with the NHS.  The similarities are uncanny.  The thing that changes here are the commissioning bodies.  As a proxy for size, Militant Manager has used the number of bodies that cover England.  So if 5 bodies of a certain level cover England, they would cover a much larger population each than if 50 bodies did the same job.

The similarities between the NHS and car design can be shown by the size changes of NHS commissioning bodies since 1990 - as illustrated in the chart below.

This shows that new bodies are introduced at a small size; and over time they grow in size with each restructure.  Over time bodies grow and die; but new ones are introduced.  So 500 PCGs have now made way for 50 PCT Clusters; 100+ Health Authorities will make way for 4 SHA Clusters by 2012.

It's deja vu all over again.  Despite these changes, nothing really changes.  So as you can see there has always been a body at the 300-500 size level since 1997.  And there has also been a regional structure between the Department of Health and this 300-500 level. 

These are incontrovertible facts; but each generation of politicians and officials think they can do something new.  And like those amongst our organisations who feel there is a technical fix to everything; there are those that think there are structural fixes to everything.

I fear that this may all be caused by the management consultants.  Who has not heard of the consultancy who gets called into a decentralised firm, and insists it should be centralised; and goes into a centralised firm, and calls for decentralisation?  This also sounds like the product of a series of structural reviews by consultants - who understand the problems with current situations; but cannot optimise overall; and cannot place their solutions in greater historic context.

But there isn't a structural fix for everything.  Somebody has already thought of it 20 years ago; and we are all tired of structural fixes.  After a series of these changes, we are exactly where we started.  And a lot of effort, time and money has gone into navel gazing.  The NHS structure is not a consumer problem like car design.

So what are the other lessons for the NHS:

1.  NHS structures change too quickly.  If car companies take 6-7 years to introduce a new model because it takes that long for consumers to adapt and factories to settle down and then be retooled; why would you think that organisational structures (which require much greater familiarity and comfort) can be turned on its head every 3-5 years (as seems to be the current average in the NHS).

2.  The NHS introduces too many names.  After any restructure, there is no need to call it different.  So District Health Authorities need not have been called Health Authorities and then Strategic Health Authorities.  The NHS could have built 20 years of brand equity in the simple, all-season name of "Health Authority."  In fact, while we are on the topic of ridiculous arguments, the NHS' names are too boring.  Why cannot SHAs be called the "Kalahari" or "Focus."  We should be more imaginative.

3.  There is no beauty in symmetry.  So though Volkswagen cover the small family segment via three equally spaced hatchbacks, other marques do it differently.  And there is no "Department for Cars" that mandates a symmetrical approach in every company.  Similarly, the NHS should be able to develop its structures differently in different areas.